Compliance Updates

Our Compliance Specialists maintain a dynamic and chronological database of updates as they are made to our courses, in order to provide our clients with specific and detailed information as to the nature of these updates. Every quarter, we issue what we call our “Compliance Blast,” which provides a detailed account of all compliance updates made in that timeframe. In this manner we keep our clients informed of regulatory changes in the industry that affect their eLearning training.

The Edcomm Group Banker’s Academy is dedicated to training excellence and compliance in the field of financial services. Our team of legal experts and research consultants have come together to bring you the very latest in updated regulations and notices from the federal banking agencies, including the Federal Reserve Bank, Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and other regulatory authorities.

Identity Theft Red Flags Rules – This final rule, published April 2013, effective May 20, 2013, with compliance required by November 20, 2013, was jointly issued by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The rules and guidelines implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended the Fair Credit Reporting Act and directed the Commissions to adopt rules requiring entities that are subject to the Commissions' respective enforcement authorities to address identity theft.

First, the rules require financial institutions and creditors to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with certain existing accounts or the opening of new accounts. The rules include guidelines to assist entities in the formulation and maintenance of programs that would satisfy the requirements of the rules. Second, the rules establish special requirements for any credit and debit card issuers that are subject to the Commissions' respective enforcement authorities, to assess the validity of notifications of changes of address under certain circumstances.

On Learning Link™, the courses “Focus on Compliance,” “Focus on Compliance for Credit Unions,” and by-role courses have been updated with relevant content in the module “BSA/AML” in topic “Red Flags of Money Laundering.”

Foreign Remittances Rule of Regulation E – The CFPB has announced its approval of final changes to the Foreign Remittances Rule to make significant changes concerning the disclosure of foreign taxes and fees. The rule will furthermore address the revision of error resolution provisions. The revisions are designed to preserve market competition and consumers’ access to remittance transfer services while facilitating implementation of and compliance with the rule’s requirements.

This rule was publish in April of 2013 and will become effective on October 28, 2013.

On Learning Link™, the courses “Focus on Compliance” and “Focus on Compliance for Credit Unions” have been updated with relevant content in the module “Regulation E: Electronic Funds Transfer Act” in topic “Consumer Liability.” The following courses have also been updated on Learning Link™:

Redesigned $100 Note – The Federal Reserve Board announced in April that the redesigned $100 note will begin circulating on October 8, 2013. This note, which incorporates new security features such as a blue, 3-D security ribbon, will be easier for the public to authenticate but more difficult for counterfeiters to replicate. The new design for the $100 note was unveiled in 2010, but its introduction was postponed following an unexpected production delay.

To ensure a smooth transition to the redesigned note when it begins circulating in October, the U.S. Currency Education Program is reaching out to businesses and consumers around the world to raise awareness about the new design as well as to inform them about how to use its security features.

More information about the new design, as well as training and educational materials, can be found at www.newmoney.gov.

On Banker’s Academy LMS™, the course “Coin and Currency” topic 3 “New Series Currency” has been updated to reflect the redesign.

Fannie Mae and Freddie Mac Regulations - Fannie Mae and Freddie Mac have been directed by the Federal Housing Finance agency (FHFA) to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the "ability to repay" requirements under Regulation Z. Fannie and Freddie are issuing letters to lenders regarding the new limitations, which will be effective January 10, 2014. Beginning Jan. 10, 2014, Fannie and Freddie may no longer purchase a loan that is subject to the "ability to repay" rule if the loan is not fully amortizing, has a term of longer than 30 years, or includes points and fees in excess of 3 percent of the total loan amount or such other limits set forth in the rule.

On Learning Link™, the courses “Focus on Compliance” and “Focus on Compliance for Credit Unions” have been updated with relevant content in the module “Truth in Lending,” topics “Higher-Priced Loans” as well as “Credit CARD Act.”

On Banker’s Academy LMS™, the course “Regulation Z: Truth in Lending Act” has similarly been updated.

The Regulatory Implementation Page – In June, the CFPB announced its new Regulatory Implementation web page, which consolidates all new 2013 mortgage rules and related implementation materials in an effort to support rule implementation and ensure that the industry is ready to comply with the new borrower protections. The page includes:

On Learning Link™, the courses “Focus on Compliance” and “Focus on Compliance for Credit Unions” have been updated with relevant content in the module “Truth in Lending,” topics “Higher-Priced Loans” as well as “Credit CARD Act.”

On Banker’s Academy LMS™, the course “Regulation Z: Truth in Lending Act” has similarly been updated.

Looking Ahead

Keep an eye on further updates in the next quarter!

Fair Credit Reporting Act (FCRA). The most recent change by the CFPB has been to mandate changes to the forms used in the background checking process which are required by the FCRA. These changes reflect that end users, consumers, and furnishers of information obtained in the background check process will now contact the CFPB instead of the FTC for FCRA related information. This update will be implemented before October 1, 2013.

Lending – Appraisals. The revisions to Regulation Z, published in February and effective January 18, 2014, implement a new provision requiring appraisals for “higher-risk mortgages.” For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used. This update will be implemented before October 1, 2013.

Telephone Consumer Protection Act (TCPA). The new TCPA rules, effective October 16, 2013, offer additional protections for consumers concerning unwanted autodialed and/or robocalls. The changes include required prior express written consent, with certain exceptions, as well as no “established business relationship” exemptions. This update will be implemented before October 1, 2013.

Trends to Watch

Our compliance and regulatory subject matter experts have been closely monitoring important trends in the financial community.

Foreign Account Tax Compliance Act (FATCA). This Act may be the most important financial crime law of this and the next generation. The IRS FATCA regulations are not very clear about the restrictions of disclosing the personal financial data the IRS receives from foreign financial institutions. If a U.S. person, who has an account in another country, believes that his or her problems with U.S. agencies from disclosure of non-U.S. accounts will be limited to tax issues they are mistaken. U.S. tax code, Title 26, Section 6103 opens up several possibilities through which U.S. government agencies, and even the U.S. Congress, could navigate to obtain tax and account information. Information the IRS may receive from foreign financial institutions (FFI) under FATCA is disclosable under the FATCA regulations. Section 6103(i) permits disclosure of tax “return information” to “any federal agency” for use in virtually any matter in which the agency has jurisdiction. The access by these U.S. agencies, including intelligence agencies and Congress, is not limited to tax-related matters but extends to other criminal and administrative matters.

The collected information may be shared with U.S. intelligence agencies for their use in investigation, collection, or analysis of information, in what is being coined “threat finance.” The work not only includes the pursuit of terrorism cases but also cases involving other national security threats, including trafficking in nuclear materials, weapons of mass destruction, humans, narcotics, and foreign corruption. Subsection (i) allows disclosure of tax “returns and return information” for use in criminal investigations. The information may be obtained through an ex parte order* by a federal district court or magistrate judge. The order may allow inspection and disclosure to employees of any federal agency who are “personally and directly engaged” in a federal case involving the enforcement of any federal criminal law. Virtually any federal prosecutor may seek such an order from a federal district or magistrate judge. Therefore, more awareness to such regulations is recommended to financial institution employees.

* An ex parte judicial proceeding is conducted for the benefit of only one party. Ex parte may also describe contact with a person represented by an attorney, outside the presence of the attorney. The term ex parte is used in a case name to signify that the suit was brought by the person whose name follows the term (from the Free Online Legal Dictionary).

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